Business Environment Case Study Kodak
Assignment-Business Environment (Case Study: Kodak)
This assignment focuses on the bankruptcy case of Kodak which occurred in the year 2012. This article provides how Kodak failed in the business of photography and what are the circumstances which led Kodak to go bankrupt in the year 2012. It also provide information on what the company could have done better to avoid their loss of market presence and revenue and what would have been a better business decision for the company to overcome these kind of scenario.
According to the reports, Kodak did a few corporate mistakes due to which it missed some great opportunities in digital photography. It is considered as one of the strategic failure of Kodak which is the biggest cause of Kodak's decline in the field of digital photography. A former employee of Kodak named Vince Barabba in his book “The Decision Loom: A Design for Interactive Decision-Making in Organizations,” has given an insight of the overall situation of Kodak which led to its bankruptcy.
In January 2012, Kodak had filed for Chapter 11 protection in the Court for the Southern District of New York for U.S. Bankruptcy. In that application the company stated that it had received $950 million from Citigroup as line of credit. On the basis of this statement by the company it can be said that the business was going towards bankruptcy in the year 2013.
Case Study: Kodak Bankruptcy
The decision of Kodak to file for bankruptcy protection was a wrong move and sad thing to do. This bankruptcy happened as it failed to adopt and follow the digital revolution. At the peak of its success Kodak was considered as one of the pioneered photography field across the globe. It failed to cope of with the rapidly changing business economy.
About a decade ago a market research was made by Kodak which revealed that digital photography will soon replace the existing photography soon. Kodak was also well aware that digital photography will gradually replace film. Although knowing the same, Kodak invented the first digital camera in the year1975. However, later due to the irresponsible decision taken by Kodak Company did not launch its new invention in the market but later concentrated on the film business.
According to statement of a professor at Harvard Business School named Rebecca Henderson, "Decades ago, It wasn’t that Kodak was oblivious to the future, but rather that it failed to execute on a strategy to confront it. By the time the company realized its mistake, it was too late. Large companies have a difficult time transitioning into new markets because there is a temptation to put existing assets into the new businesses.”
What the company could have done better to avoid their loss of market presence and revenue?
In the year 1981, a market intelligence study was made by former employee of Kodak Vince Barabba. At that time Sony has launched its first electronic camera. In the mean time one of the retailers of Kodak suggested that they should now concentrate on digital photography. Kodak’s CEO, Barabba then conducted an extensive market research to find out core technologies related to digital photography.
The aforesaid study helped Kodak to know that digital photography can replace the potential caliber of Kodak and well established business. However, it also came to light that digital photography can do that slowly and that Kodak has a period of ten years to prepare to overcome and tackle this type of situation.
During that ten long years opportunity Kodak did not prepare itself for later consequences and disruption. Kodak followed the mistake as that of its founder George Eastman during that period. Mr. Eastman did not concentrate on a profitable dry-plate business when he moved to films and when he an investment was made by him in the color film even though it was of inferior as that of a black and white film. Kodak could have done better management plans to overcome these kind of situation. A well developed and organized plan and strategy was needed to meet the goal within the gap of these ten years.
What should have been a better business decision?
In the recent competitive business world, a few businesses are leading and enjoying success oin their respective field whereas a few of them got closed abruptly due to business failure. One of the business failure and abrupt closing of business is the story of Kodak. Kodak, the company which one once considered as one of the biggest technological hub of digital photography suddenly went bankrupt.
To analyze the whole scenario, what could have Kodak done at that time will be an ideal case of the discussion. The company Kodak was established in the year 1999. To know the whole scenario let compare the company Instagram founded in the year 2010 with Kodak. From 1999 to 2014 there was a market shift within a gap of these twelve years. The following is a data which is a comparison with the two companies as per the consumer's prospective;
From the aforesaid data one can see that on the basis of image processed the size of business of Kodak in the year 1999 was same as that of Instagram in the year 2013. At the end of March 31st Kodak's market value was $20.9B. It is to be noted that on the same date, Kodak had employed about 83,000 employees.
Now let's compare it with Instagram, In the year 2012, Instagram was purchased by Facebook when it had only 12 employees for $1B without any revenues. From the above analysis one can know that If Instagram can give more value to a person than why Kodak cannot. Here, it can be concluded that Kodak could have maintained its film related revenues and profitability if they have stayed in the consumer photography market whether it may be film or digital market.
It is very unfortunate see a company like Kodak's falls from a successful industrial entity to a bankrupt organization. Like Kodak there is one more example for such bankruptcy is of Fujifilm. Kodak used to support about ten thousand people apart from being involved with the Rochester NY community. From the above presentation and discussion, it can be concluded that when a large sized company like Kodak fails it also makes a huge impact on the other organizations and people. Thus, it is necessary to take correct measures and decision to make a business prosper. Every organization should have pre determined plans to overcome these types of business crisis. A proper management team and professionally qualified employees are required in an organization to overcome these types of situation.
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